OMB Seeks Public Comment on Report on Cost of Regulations

Alarmed by the rising cost of new federal regulations, Congress included a provision in the Omnibus Consolidated Appropriations Act of 1996 requiring the White House Office of Management & Budget (OMB) to prepare by September 30, 1997 an accounting statement and associated report to Congress on the "cumulative costs and benefits of Federal regulatory programs."

In mid-July, OMB published its accounting statement and report in the Federal Register for public comment. Because the deadline for submission of the final report to Congress is less than 90 days away, the public comment period will be very short. Nevertheless, comments from the business community, state and local governments, and concerned citizens are needed, as the report will set the tone for future debates on the need for regulatory reform.

A key element of the report to Congress will be OMB's independent assessment of the quality and reliability of the country’s regulatory system. Unfortunately, recently released OMB reports on other matters raise some question about how thorough and critical a job OMB will be allowed to do with the regulatory report.

In its 1997 annual report to Congress under the Unfunded Mandates Reform Act of 1995, for example, OMB did not offer its own opinion about whether the agencies met the requirements of the Act. Any failure to address that issue in the new report will immediately undermine the report’s credibility, as would attempts by OMB to avoid alternative views, information, and debate about significant regulatory actions. As the debate over EPA's proposed standards for ozone and particulate matter shows, there often is considerable interagency and public discussion over the costs and benefits of new mandates. OMB’s failure to recognize such debate should be called to the attention of the administration and Congress as unacceptable and misleading.

OMB also is required to provide Congress with recommendations to "reform or eliminate any Federal regulatory program that is inefficient or is not a sound use of national resources." The public comment period offers an opportunity to make certain that the report includes such recommendations, including specific recommendations on regulatory programs that should be eliminated.

While it remains to be seen whether OMB itself will recommend anything substantive, opportunities for reform clearly abound. The federal regulatory system includes more than 55 agencies, 130,000 federal employees, and $14 billion in federal spending. On July 3, the average American finally earned enough to pay for his or her annual share of government spending and the cost of regulation. Over just the last 15 months, federal agencies have issued more than 4,800 rules--at least 78 of which are projected to cost over $100 million. In little more than a year, the federal government has levied at least $8 billion in new regulatory taxes. At this rate, Congress is adding new regulatory taxes at least as fast as it promises to cut taxes over the next five years.